Utility Week

UTILITY Week 22nd April 2016

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Page 14 of 31

Finance & Investment This week Macquarie to sell Thames Water stake Water company confirms that the infrastructure fund is looking to sell its 26 per cent holding Australian infrastructure fund Macquarie is looking to sell its 26 per cent stake in Thames Water for as much as £3 billion. In May last year, Macquarie dismissed speculation in the national press that it wanted to sell off its shares in the water and sewerage company. However, Thames Water has confirmed that the latest reports are true. The company said in a statement: "We remain focused on delivering first class water and sewerage services to our 15 million customers throughout the sale process." The Times reported that Macquarie has hired invest- ment bank Nomura to find a buyer. Nomura declined to comment. According to the Telegraph, Thames's existing shareholders – including BT pension fund, Abu Dhabi Investment Authority and the China Investment Corpora- tion – will be given the opportunity to buy extra shares in the business ahead of external buyers. Thames Water was bought for £8 billion from German firm RWE in 2006, by Kemble Water – a consortium of pension and investment funds led by Macquarie. Part of the expected £3 billion proceeds from the sale will be used to reduce Thames's debts, and the rest will go to Macquarie and its partners. Thames invests about £1 billion a year upgrading its sites and pipes. It supplies around 2,600 million litres of tap water to 9 million customers across London and the Thames Valley, as well as removing and treating more than 4 billion litres of sewage for 15 million customers. LV ELECTRICITY £12m extra for Grid black start contracts Ofgem has handed National Grid an extra £12.39 million to fund black start contracts, weeks aer the system operator signed two contracts for Fiddler's Ferry and Drax power stations. A National Grid spokesperson said the contracts awarded to the plants fell outside its target spend for black start contracts. National Grid asked Ofgem to up its £22.35 million target for 2016/17 by £23.88 million last December, but Ofgem agreed a maximum increase of £12.39 mil- lion in a letter earlier this month. The regulator turned down National Grid's request for a £28 million increase to the amount available for warming payments, instead offering it an extra £16.51 million. The company came under fire in the media for the timing of black start contracts for Fiddler's Ferry and Drax, with unnamed critics suggesting National Grid had awarded them in a "panicked" bid to keep the coal stations open and avoid a capacity crunch this winter. National Grid denied the claims. WATER UU secures £500m European bank loan United Utilities (UU) has secured a £500 million loan from the European Investment Bank to support its investment across the northwest of England. The 18-year loan from the lending institution will be used to finance improvements to the region's water and waste- water networks as part of UU's £3.5 billion capital investment programme for the 2015-20 regulatory period. The first £250 million of the new loan was signed last week and the second half is expected to be signed as the investment programme progresses. ENERGY Centrica cuts 800 jobs as British Gas loses customers Centrica axed 800 jobs in the first quarter of this year, as British Gas's domestic customer numbers fell by 1.5 per cent. In a trading statement, the group pinned the loss of custom- ers on a high number of long- term contracts coming to an end. It said it would launch "new propositions" in the second quarter to stem the losses. The company reiterated that 3,000 jobs are expected to go in 2016, helping to bring down costs by £200 million over the year. Last summer, Centrica announced plans to reduce its headcount by 4,000 – shedding 6,000 jobs but creating 2,000 – as part of a drive to slash annual costs by £750 million by 2020. Thames: 'remains focused' during sale process UTILITY WEEK | 22ND - 28TH APRIL 2016 | 15 Stock watch ENERGY ASSETS SHARE PRICE, FIVE DAYS 700 600 500 400 18 April 19 April ENERGY ASSETS SHARE PRICE, ONE YEAR Shares in the Scottish meter installation and management company Energy Assets shot up this week following news of a takeover bid by Euston BidCo – a company owned by investment funds controlled by Alinda Capital Partners. Shareholders were offered 685p per share – a more than 40 per cent premium on the closing price the day before the offer (488p). The offer values the company at £198 million. 700 600 500 400 Jul 2015 Jan 2016 Oct 2015 Apr 2016 pence pence

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